Correlation Between ARMOUR Residential and Necessity Retail
Can any of the company-specific risk be diversified away by investing in both ARMOUR Residential and Necessity Retail at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining ARMOUR Residential and Necessity Retail into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ARMOUR Residential REIT and Necessity Retail REIT, you can compare the effects of market volatilities on ARMOUR Residential and Necessity Retail and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in ARMOUR Residential with a short position of Necessity Retail. Check out your portfolio center. Please also check ongoing floating volatility patterns of ARMOUR Residential and Necessity Retail.
Diversification Opportunities for ARMOUR Residential and Necessity Retail
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between ARMOUR and Necessity is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding ARMOUR Residential REIT and Necessity Retail REIT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Necessity Retail REIT and ARMOUR Residential is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on ARMOUR Residential REIT are associated (or correlated) with Necessity Retail. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Necessity Retail REIT has no effect on the direction of ARMOUR Residential i.e., ARMOUR Residential and Necessity Retail go up and down completely randomly.
Pair Corralation between ARMOUR Residential and Necessity Retail
Assuming the 90 days trading horizon ARMOUR Residential REIT is expected to generate 0.71 times more return on investment than Necessity Retail. However, ARMOUR Residential REIT is 1.42 times less risky than Necessity Retail. It trades about 0.04 of its potential returns per unit of risk. Necessity Retail REIT is currently generating about -0.03 per unit of risk. If you would invest 1,811 in ARMOUR Residential REIT on November 5, 2024 and sell it today you would earn a total of 313.00 from holding ARMOUR Residential REIT or generate 17.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 22.27% |
| Values | Daily Returns |
ARMOUR Residential REIT vs. Necessity Retail REIT
Performance |
| Timeline |
| ARMOUR Residential REIT |
| Necessity Retail REIT |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
ARMOUR Residential and Necessity Retail Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ARMOUR Residential and Necessity Retail
The main advantage of trading using opposite ARMOUR Residential and Necessity Retail positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ARMOUR Residential position performs unexpectedly, Necessity Retail can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Necessity Retail will offset losses from the drop in Necessity Retail's long position.| ARMOUR Residential vs. Cherry Hill Mortgage | ARMOUR Residential vs. AGNC Investment Corp | ARMOUR Residential vs. Chimera Investment | ARMOUR Residential vs. Two Harbors Investment |
| Necessity Retail vs. SiriusPoint | Necessity Retail vs. RLJ Lodging Trust | Necessity Retail vs. New York Mortgage | Necessity Retail vs. Global Net Lease |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
Other Complementary Tools
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world | |
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years | |
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals |